Ensuring
food safety and raising consumer confidence has been the central preoccupation
of the whole dairy industry this year. In this context, the 19th annual meeting
of the China Dairy Industry Association (CDIA) was held on 13-15 September in
Fuzhou, Fujian province, with the theme of safety, responsibility, reputation,
according to Dairy Products China
News 1310 issued by CCM.
Due
to the efforts made by the Chinese government and the dairy processors,the
dairy industry has continued in its recovery with slight growth. According to
the data from the National Bureau of Statistics, dairy output reached 13.1
million tonnes in H1 2013, with a YoY growth of 11.6%. From this figure, liquid
milk/yoghurt and milk powder/formula reached 11.3 million tonnes and 0.8
million tonnes, up 12.4% and 5.9%respectively year on year. Meanwhile,the dairy
industry recorded a net profit of USD1.4 billion (RMB8.7 billion) in H1 2013,
up 23.6% YoY.
However,
consumer confidence in domestic dairy products is far from restored, which can
be reflected by a number of data. China imported 91,500 tonnes of infant
formula (in retail packaging) in 2012, up 16.9% over 2011, while it imported
56,000 tonnes in H1 2013, an increase of 28.5%.Imports of liquid milk increased
from 40,500 tonnes in 2011 to 93,800 tonnes in 2012 and then rose to 96,000
tonnes in H1 2013, up 152% over H1 2012. Moreover, all these figures exclude
the volumes coming in directly as a result of consumers’ overseas purchases.
Additionally,
the dairy industry continues to face insufficient milk supply. This has been
underlined with the shortages in availability of domestic liquid milk in some
cities since early September (this has been seen in diverse locations including
Guangzhou, Shenzhen and Jinan). The shortage stems from falling cow numbers in
key milk production areas as household producers have been exiting the market,
leaving the large-scale dairy farms unable to keep pace with demand. The
interrupted supply of milk powder from New Zealand has also played a part here
of course. It appears likely that some companies will aim to safeguard their
profitability by decreasing production of mid-market and low-end liquid milks
in order to maintain output of premium products.
Promoting
the safety and quality of dairy products is still the key task for the Chinese
government. According to Mr. Ma Chunliang, Deputy Director of China Food and
Drug Administration(CFDA), the Detailed Rules for Infant Formula Processor
Approval will be released soon: this is in review phase,with 10,000+ opinions
submitted from the public on its topics (please see Dairy Products China News
Vol.6 September Issue, p8). The CFDA is now formulating other policies and
measures, such as regulations controlling infant formula sales in pharmacies,
labelling and packaging for infant formula, plus a system recording production
information on the infant formula processors.
By
the end of June, 917 dairy processors had received production licenses compared
with 716 at the end of 2011. From the latest figure 128 are infant formula
processors, compared with 119 at the end of 2011. Mr. Song Kungang, the CDIA’s
Director, noted that China’s dairy industry has entered into an adjustment and
refinement stage, and especially the infant formula industry will face
consolidation as a number of dairy processors will be eliminated in the near
future. (Note: some earlier figures put out on the total number of processors
were lower due to the exclusion of small scale dairy companies). The changes on
pharmacy sales are important when it is considered that dairy products sell at
an estimated 2.1 million individual points of sale (that is retail stores of
all types) around the country as against infant formula selling through just
500,000.
Mr.
Zhu Hongren, chief engineer of the Ministry of Industry and Information
Technology (MIIT), indicated that the acquisition and reorganization of the
dairy industry will be promoted by both market mechanisms and government
guidance. The key factors of production– inputs to the production process, including
land, capital, information, etc – will be concentrated amongst the leading
companies upon which the government will focus its support and also its
pressure to upgrade. In addition, large-scale companies are encouraged to merge
and reform small-scale companies; middle and small scale companies are encouraged
to merge and set up industrial alliances; moreover MIIT is also encouraging
competitive and listed companies to put in place international business
strategies.
It’s
worth noting that the China Chamber of Commerce of Foodstuffs and Native Produce
(CCCFNP) established a dairy product imports working group on 11 September,
part of the Chinese government’s move to ensure the safety of imported dairy
products. This working group will specialise in solving the problems faced by
the growing number of dairy product importers – currently, 1400+ import agents
of dairy products have been recorded by the CCCFNP.
Key
Processors’ Performance in H1
Dairy
Product Safety on the Agenda
Dumex
Caught in Bribery Scandal
Government
Further Promotes Infant Formula Consolidation
Hebei
Promotes Milk Powder/Formula Industry Development
Huishan
Dairy IPO and Listing
Beijing
Sanyuan to Expand Formula Business
Shengmu
Farming Plans for Organic Growth
Tianyou
Dairy Targets Infant Formula
Modern
Dairy Performs Well in 2013
Yinqiao
Biotech Launches New Fresh Milk
Treasure
of Plateau Launches Yak Milk Infant Formula
Dairy Products China News, a monthly publication
issued by CCM on 15th, offers you the latest information on new market
dynamics, company development, new products, technology, packaging and raw
material supply, etc. It also focuses on the government’s direction and
polices, helping you get the whole picture of the industry.
About
CCM
CCM is dedicated to market research in China
Guangzhou
CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China
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